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physicians are terrible at business. Yes a generalization but it really applies to most. Mistakes I have observed or experienced first hand:
1. Expectations of a life style that is unrealistic. When hiring junior associates, I started by considering I was really hiring partners but quickly realized most candidates were more interested in deals that limited work hrs and maximized immediate pay. They would except a lot less compensation by taking a larger salary but either delayed or no partnership tract. An extra dollar today meant a lot more than 3 dollars more in 3 years. I started my own practice and built it up. Broke even my first year but was far ahead of where I would have been after 3 years if I became a junior associate. I lived far above my means without a savings plan that was proportional to my salary. I would always advise living below your means. I built a mansion in an expensive part of an expensive Real estate market with a large mortgage. I lucked out with two real estate deals that allowed me to reduce my debt to just 800K. An extremely smart move on my part.
2. Most physicians will borrow whatever they can regardless of the type of deal offered. Why do you all receive offers every month for signature loans? Thank god I never bought on credit. People leasing cars will justify getting more expensive cars than if they paid cash. Being able to afford larger car payments is not jusification to buying “more car” than you need. My group rented a new office and had to pay for the build out. I wanted to pay cash for the buildout but if they could not was willing to take a loan for the funds. They elected to rent 30% more square footage than they needed and did not build that out. This gave them enough of a buildout allowance so they did not have to pay any funds. However, they paid 30% more rent over 7 years. A stupid decision that cost a lot more. I separated from the group after a year and left them with the rent.
3. As most physicians I worked way too hard. 80 hr weeks without vacations. You can work too hard and not leave yourself time to look for other opportunities. On a rare day off, I bought a lot next to my home that did not support a septic field. I paid 25000 down with the rest (100,000) due in 5 years. My neighbor across the street paid for the sewer to be brought in and he gave me access to it. That allowed me to sell the property for 500000 since a home could be built on it. Another example was my first vacation at a local beach. Recognized opportunity when I bought a large beach home. Real estate was in a slump then. Sold if for double the price 3 years later. Both of these deals were how I was able to pay down the mortgage I mentioned above. Luck...of course but it would not have happened if I kept up my work schedule.
4. My only savings in 20 years was the equity in my home and a keogh plan with about 300,000 in it. To some may have represented a lot but no where what it should have been with my yearly salary. Of course 2008 knocked down the value in my home so the two real estate deals represented almost all the equity in my home. I should have been living a lot lower than my salary allowed so I could have been saving and avoided a ************************ of a lot of stress in my life. I once again got extremely lucky. IN 2011 I put my entire keogh in a single investment. I never appreciated how precarious my situation was but bought stock and options in tesla. I DO NOT ADVISE ANYONE ELSE TO DO THIS. If worked out for me. I made over 20 million dollars. I retired 4 years ago and sold my home. Built a smaller home and did so without a mortgage. Will never take out a loan and enjoy not paying out any loans.
I never appreciated how precariously I was living. Two years after retirement I had a stroke. If I hadn’t won the investment lottery I would have really not been able to afford my retirement. Lesions learned
live below your means
be reluctant to borrow
look at total cost/benefit of contracts or deals you make
pay off loans you take early
dont develop tunnel vision. Your income is only dependent on how hard you work if you lack imagination.
Dont work so hard that you miss out on life. Your health should never be taken for granted
1. Expectations of a life style that is unrealistic. When hiring junior associates, I started by considering I was really hiring partners but quickly realized most candidates were more interested in deals that limited work hrs and maximized immediate pay. They would except a lot less compensation by taking a larger salary but either delayed or no partnership tract. An extra dollar today meant a lot more than 3 dollars more in 3 years. I started my own practice and built it up. Broke even my first year but was far ahead of where I would have been after 3 years if I became a junior associate. I lived far above my means without a savings plan that was proportional to my salary. I would always advise living below your means. I built a mansion in an expensive part of an expensive Real estate market with a large mortgage. I lucked out with two real estate deals that allowed me to reduce my debt to just 800K. An extremely smart move on my part.
2. Most physicians will borrow whatever they can regardless of the type of deal offered. Why do you all receive offers every month for signature loans? Thank god I never bought on credit. People leasing cars will justify getting more expensive cars than if they paid cash. Being able to afford larger car payments is not jusification to buying “more car” than you need. My group rented a new office and had to pay for the build out. I wanted to pay cash for the buildout but if they could not was willing to take a loan for the funds. They elected to rent 30% more square footage than they needed and did not build that out. This gave them enough of a buildout allowance so they did not have to pay any funds. However, they paid 30% more rent over 7 years. A stupid decision that cost a lot more. I separated from the group after a year and left them with the rent.
3. As most physicians I worked way too hard. 80 hr weeks without vacations. You can work too hard and not leave yourself time to look for other opportunities. On a rare day off, I bought a lot next to my home that did not support a septic field. I paid 25000 down with the rest (100,000) due in 5 years. My neighbor across the street paid for the sewer to be brought in and he gave me access to it. That allowed me to sell the property for 500000 since a home could be built on it. Another example was my first vacation at a local beach. Recognized opportunity when I bought a large beach home. Real estate was in a slump then. Sold if for double the price 3 years later. Both of these deals were how I was able to pay down the mortgage I mentioned above. Luck...of course but it would not have happened if I kept up my work schedule.
4. My only savings in 20 years was the equity in my home and a keogh plan with about 300,000 in it. To some may have represented a lot but no where what it should have been with my yearly salary. Of course 2008 knocked down the value in my home so the two real estate deals represented almost all the equity in my home. I should have been living a lot lower than my salary allowed so I could have been saving and avoided a ************************ of a lot of stress in my life. I once again got extremely lucky. IN 2011 I put my entire keogh in a single investment. I never appreciated how precarious my situation was but bought stock and options in tesla. I DO NOT ADVISE ANYONE ELSE TO DO THIS. If worked out for me. I made over 20 million dollars. I retired 4 years ago and sold my home. Built a smaller home and did so without a mortgage. Will never take out a loan and enjoy not paying out any loans.
I never appreciated how precariously I was living. Two years after retirement I had a stroke. If I hadn’t won the investment lottery I would have really not been able to afford my retirement. Lesions learned
live below your means
be reluctant to borrow
look at total cost/benefit of contracts or deals you make
pay off loans you take early
dont develop tunnel vision. Your income is only dependent on how hard you work if you lack imagination.
Dont work so hard that you miss out on life. Your health should never be taken for granted
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